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Petya Malice Spilling Over: Buy Cybersecurity Stocks & ETFs

By Zacks Investment ResearchStock MarketsJun 27, 2017 10:16PM ET
Petya Malice Spilling Over: Buy Cybersecurity Stocks & ETFs
By Zacks Investment Research   |  Jun 27, 2017 10:16PM ET
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The international cyberattack that hit Ukraine yesterday outsmarted the whole world, especially the technologically advanced Europe and United States, yet again. Tens of thousands of machines were crippled in dozens of countries. It mainly infected computer systems of banks and major companies in Ukraine, Russia and Britain.

The ransomware called “Petya” locks an infected computer and asks the computer's administrator to pay $300 worth of the bitcoin to regain control of them. Per the Moscow-based cybersecurity firm Group IB, the virus affected about 80 companies in Russia and Ukraine.

It came a month after the WannaCry hack that locked up more than 200,000 computers paralyzing factories, hospitals, shops and schools in over 150 countries (read: Cybersecurity ETFs Set to Rally After a Global Cyberattack).

Among the worst impacted by the latest attack were Russia's top oil producer Rosneft, Ukrainian international airport, the world's biggest advertising company WPP (LON:WPP) (NASDAQ:WPPGY) based in Britain, Danish shipping giant A.P. Moller-Maersk (OTC:AMKBY) , Russian metals giant Evraz EVRZF, German postal and logistics company Deutsche Post (OTC:DPSGY) , French construction materials company Saint Gobain (PA:SGOB), U.S. drug giant Merck (NYSE:MRK) (M), and food and beverage company Mondelez International (NASDAQ:MDLZ) .

Given that the malaise is spreading all over the world, cybersecurity stocks and ETFs are set to rally in the coming days. Investors should tap this opportune moment with the following two solid stocks and ETFs:

Stock Picks

Check Point Software Technologies Ltd. (NASDAQ:CHKP)

Based in Oklahoma, Check Point is a leading provider of policy-based enterprise security and traffic management solutions. While the stock saw negative earnings estimate revisions for this year over the past three months, it delivered an earnings surprise of 5.64% on average in the past four quarters. Additionally, its earnings are expected to grow 10.5% year over year. CHKP has a Zacks Rank #2 (Buy) and a VGM Style Score of B (see: all the Technology ETFs here).

Fortinet Inc. (NASDAQ:FTNT)

Based in California, Fortinet is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide. It has seen solid earnings estimate revision of six cents for this year over the past 90 days with an expected impressive growth of 55.98%. Additionally, it has delivered strong average earnings surprise of 139.58% in the last four quarters. The stock has a Zacks Rank #2 and a VGM Style Score of B.

ETF Picks

PureFunds ISE Cyber Security ETF HACK

The fund offers exposure to those companies that ensure the safety of computer hardware, software, networks and fight against any sort of cyber malpractices. It tracks the ISE Cyber Security Index, holding 40 securities in its basket with none accounting for more than 4.27% share. In terms of country exposure, U.S. firms take the top spot at 74%, followed by Israel (11%), the United Kingdom (6%), Japan (5%), South Korea (2%), the Netherlands (2%), and others (1%). The fund charges 60 bps in annual fees and sees volume of 430,000 shares a day on average. It has amassed about $1.1 billion in its asset base (read: Correction in U.S. Tech Sector? Inside Most-Hurt ETFs).

First Trust Nasdaq Cybersecurity ETF CIBR

This ETF has accumulated nearly $265.9 million in its asset base and charges 60 bps in annual fees. It trades in a moderate average daily volume of around 92,000 shares. The fund follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. In total, the product holds 30 stocks in its basket with each accounting for less than 7% of assets. Like HACK, American firms account for 75% of CIBR while Israel, United Kingdom, the Netherlands and many others make up for a single-digit allocation each.

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A P MOLLAR-MRSK (AMKBY): Free Stock Analysis Report

Fortinet, Inc. (FTNT): Free Stock Analysis Report

WPP PLC (WPPGY): Free Stock Analysis Report

Check Point Software Technologies Ltd. (CHKP): Free Stock Analysis Report

PURFDS-ISE CYBR (HACK): ETF Research Reports

FT-NDQ CYBERSEC (CIBR): ETF Research Reports

Mondelez International, Inc. (MDLZ): Free Stock Analysis Report

Deutsche Post AG (DE:DPWGn) (DPSGY): Free Stock Analysis Report

EVRAZ PLC (EVRZF): Free Stock Analysis Report

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Zacks Investment Research

Petya Malice Spilling Over: Buy Cybersecurity Stocks & ETFs

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Petya Malice Spilling Over: Buy Cybersecurity Stocks & ETFs

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